Does Anyone Have an Investor Crystal Ball?

The mutual fund industry has worked hard at portraying an image of prognosticator with regard to stock picking. The mutual fund executives lead the public to believe that they know which managers are going to pick the best stocks. There is nothing further from the truth.

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What they do is hire hundreds of investment managers, knowing that by chance a few will get lucky and pick the right stocks.

These Wall Street bullies have successfully convinced the investing public that they are smarter and have the information to ‘beat’ the market.

The problem is the Wall Street bullies have no idea which manager will be successful until after it is all done. They then market the successful managers as the best and brightest. The truth is the mutual fund industry has no idea who will be successful going forward.

This “scam” has gone for years and investor has paid a huge price for this “expertise” in high fees and overall poor performance.

Dalbar Research an independent organization that studies investor performance.  Dalbar only studies investors with over $100,000 in their portfolio. The latest research covered a 20 year period from 1992 thru 2011. What they found was

Equity Fund Investors (with and without advisors) averaged 3.49%
S&P 500 return was 7.81%
Inflation rate 2.51%

These statistics are a result of an attempt to time the market, pick stocks and track record investing. No one can consistently pick the right stocks or get in and out of the market at the right time. It has also been proven that past performance does NOT predict future success.  It just doesn’t work

We are now experiencing the ‘prognosticators’ who took their clients out of the market in 2008. These ‘experts’ are now marketing this feat. They lead investors to believe that they can earn high rates of return with no or much less risk. What these bullies don’t tell you is that, this is a matter of luck and not skill. There is no evidence that they will repeat in the future.

Remember NO ONE can predict the future.

Your best results will come when you earn market rates of return in a globally diversified portfolio. And perhaps more importantly, remain disciplined to your prudent strategy.

Own equities….globally.diversify …..rebalance

Hope everyone enjoyed a safe and happy Labor Day holiday

Go Pack Go!!!

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